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Q&A: MBA exec discusses new affordable housing initiative

With the lack of affordable housing remaining an issue throughout the nation, the Mortgage Bankers Association recently announced a new initiative aimed at building partnerships to increase the number, magnitude and sustainability of solutions available to borrowers.
“We need to explore how the lending community can better partner with public, private, and non-profit stakeholders to ensure more Americans have access to homes they can afford,” said MBA President and CEO Robert D. Broeksmit in introducing the new program. “As the trade association representing the full breadth and depth of the mortgage lending community, MBA should, and will, be a leader in finding innovative solutions.”
Steve O'ConnorAt its helm will be Steve O’Connor, a 23-year veteran of the organization whom Broeksmit called “uniquely qualified to lead this new initiative.”
“He knows our members, he knows the issues, and he has strong relationships with a broad group of stakeholders, including affordable housing groups, consumer advocates, and civil rights organizations,” Broeksmit continued. “Steve has a real passion and drive when it comes to addressing the needs of underserved markets.”
Transitioning into his new role as senior vice president for affordable housing initiatives at MBA, O’Connor briefly spoke with Scotsman Guide News about the new program, its goals and how the mortgage community can benefit from its work.

Why did the MBA feel the time was right to take an active hand in looking for affordable housing solutions?

When you look at changes in the marketplace, it’s been a growing affordability crisis now for a number of years. And there's no sign of it abating anytime soon — in part because of the severe lack of housing stock. The production of new housing stock hasn't kept pace with the need. It's going to take years to catch up. 
That’s exacerbated a host of other underlying challenges in the marketplace. The feeling was that this was a good time for MBA to lend its voice and try to find solutions, particularly through new partnerships, both in the policy arena where we can align with other stakeholders across the industry, in the nonprofit sector and the affordable housing ecosystem writ large. We want to align around business and nonprofit partnerships with others who typically are in this space to see if we can come up with some new approaches to reach the borrower so we can help improve the situation around affordability.

Is this going to be a national program, or is it a situation where you’ve identified a few areas that need specific attention?

Really, it's a national effort, particularly at the policy level. But going down to the state and local, there will be efforts for us to be part of various coalitions and such. On the business side, part of what we're doing over the next couple of months is an environmental scan, talking to a lot of stakeholders, including our members, to be strategic. It's where we'll focus so that we can have the greatest impact. There are so many dimensions to this problem — whether it's housing stock, whether it's racial ownership gaps, whether it's millennials and student debt, whether it's a low-income rental housing. And we really want to do is figure out where MBA can be effective in moving the needle over the next couple of years and try to pinpoint a couple of key areas.

How do you go about starting to tackle a problem as broad as affordable housing? What are the key areas of focus here at the beginning?

On a preliminary basis, there are a couple of things that we're starting to focus on. One is the racial homeownership gap. A lot of people have been talking about the fact that the black homeownership gap, in particular, hit a 50-year low recently, and a lot of different organizations are working on that problem from different perspectives. What MBA would bring to that conversation is the core value proposition of our members, which is their business acumen and the fact that they look for pragmatic solutions. 
We’re also looking at workforce housing. It's an acute problem in high-cost housing markets. You see the Washington [D.C.] area, Seattle, San Francisco — anywhere where the cost of housing has grown much faster than incomes. There, you have workers who cannot afford to live in the communities where they work. So they're making these extraordinary commutes, which is causing congestion. It's costly. It’s a whole quality of life issue, not just for those people, but for the entire community or the communities involved. That’s another area that we're looking on a preliminary basis. 
And then of course, there are lots of different options on the multifamily front. That's a little more formative.

What can MBA members — and the mortgage community in general — expect out of the initiative? What kind of benefits are you looking to achieve for the mortgage banking community as a whole in undertaking this?

We'll start with the second part — the benefit. You know, ideally you create opportunities for lenders to generate new business by reaching deeper into markets than they would've in the past because of partnerships, particularly with third party groups. When I look at the challenges in this space, I always think, what are the barriers? What are the areas of friction? What are the incentives? There are three areas that we I think can make an impact in the near term. One is around the knowledge gap, in particular when it comes to home ownership. A lot of people out there believe that you need 20% down or you need perfect credit, and they're not aware that there are a plethora of programs out there for people who don't have 20% down. There are down payment assistance programs or various options for people who have impaired credit. 
[The second is that we want to] try to address the trust gap, particularly through partnerships with other intermediaries like housing counselors, nonprofits, or even faith-based groups and the philanthropic community. You've got a trust gap where a lot of people, particularly from distressed communities or communities that were ravaged by the financial crisis, may be reluctant to trust the formal banking system or formal financial institutions. What we wanted to do there is partner with people that potential borrowers in those communities do trust, so that they can find their way to lenders who can help them. 
And then the last piece is market gaps, where we've got programs out there, but maybe they're not working the way we originally intended because of, for example, changes in the way borrowers are using credit. Think about down payment assistance programs. Think about credit scoring mechanisms. Think about interest rate buydown and these various products and tools. Are there ways that we can improve these products and tools and mechanisms to reach more borrowers? There are different types of borrowers there are in the marketplace, like multigenerational borrowers who pull their income to buy a home, or people who use credit differently and maybe their credit traditional credit profile doesn’t match with their ability to qualify for a mortgage.


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